Oh Wow! The Dow Hits 14,000

The Dow Jones industrial average closed above 14,000 for the first time on Thursday on the heels of a strong technology sector. The comeback was a sign that Wall Street has bounced back after Wednesdays disappointing earnings reports and testimony by Federal Reserve Chairman Ben Bernanke that the fallout from the subprime debacle would cause substantial financial losses.

The Dow had flirted with the 14,000 mark since Tuesday when it surpassed it for the first time, although Thursday was the first time it managed to close above 14,000. (See Dow Cracks 14,000) The Standard & Poors 500 index also had a record close gaining 0.5%, or 6.91, to close at 1,553.08. The Nasdaq composite index hit a 6-year high boosted by a strong tech sector. The Nasdaq rose 20.55, or 0.8%, to 2,720.04.

Despite the new record Birniyi Associates analyst Cleveland Rueckert wasnt all that impressed. When the index makes it to these round numbers everyone likes to stop and stare, but in the grand scheme of things it doesnt really mean a whole lot, Rueckert said. Right now the markets making new highs and its definitely positive. Its interesting that the Dow has continued to outperform the S&P. I think the fact that theyre both continuing to make new highs is a positive sign.

The big push that moved the Dow over the 14,000 mark on Thursday was
International Business Machine's
second quarter earnings. The technology companys sales came in at $23.8 billion, an 8.7% rise from last years $21.9 million. (See Big Earnings At Big Blue)
Juniper Networks
profits boosted its shares by 12.5% and business software company
SAP
AGs profit rose 8% sending its shares skyrocketing 6.9%.
Hewlett-Packard
shares rose 2.7% on researcher IDCs report that it had picked up market share in the second quarter. And
Microsoft
shares jumped 1.9% on news that its fourth quarter profit gained 7%.

The days big movers include
Clearwire
, which will team up with rival
Sprint Nextel
to develop a broadband network using WiMax technology. WiMax, like Wi-Fi, provides wireless technology at high speeds, but does so over larger areas. Clearwire shares soared 34.4%, or $8.52, to $33.30 on Thursday.

The Conference Board released a report saying that U.S. economic growth is likely to continue, albeit at a slowed pace. (See How Will The Economy Grow? Slowly) A decrease in housing permits was the biggest contributor to the decline, followed by increasing claims for unemployment insurance, and declining consumer expectations. The Conference Boards report echoed sentiments by Bernanke in his semi-annual report to Congress. Bernanke said Wednesday the economy is growing at a sustainable rate but reiterated concerns about the troubled housing sector. Demand for homes has pulled back over the past year leaving builders with a glut of new, unsold properties. "For the most part, financial markets have remained supportive of economic growth," said Bernanke. "However, conditions in the subprime mortgage sector have deteriorated significantly, reflecting mounting delinquency rates on adjustable-rate loans." (See Same Old Ben With A Dash Of Subprime)

As subprime concerns continued to weigh on the market, S&P announced it downgraded its credit ratings on 418 classes of bonds backed by subprime loans after recalculating the odss that borrowers will default.

Meanwhile, American Home Mortgage, which makes home loans to borrowers with less-than-sterling credit, was asked by the New York Stock Exchange to issue a statement on any corporate developments which may explain unusual activity in the stock. American Home Mortgages shares plunged 20.8%, or $2.83, to $10.76 at the close on Thursday.